European earnings calendar

The earnings season in the US has kicked off with earnings from the banks JP Morgan ($JPM) and Wells Fargo ($WFC). Below are the earnings date for selected European and Nordic publicly listed companies. The companies are mostly constituents of the indices EURO STOXX 50®, STOXX® Europe 50 and OMX Nordic 40.

Chr. Hansen Holding A/SCHR.CO2020-01-15Specialty Chemicals
Sandvik ABSAND.ST2020-01-21Specialty Industrial Machinery
ASML Holding N.V.ASML.AS2020-01-22Semiconductor
Tryg A/STRYG.CO2020-01-22Insurance—Diversified
KONE OyjKNEBV.HE2020-01-28Specialty Industrial Machinery
LVMHMC.PA2020-01-28Luxury Goods
Koninklijke Philips N.V.PHIA.AS2020-01-28Diagnostics & Research
SAP SESAP.DE2020-01-28Software—Application
Novartis AGNOVN.SW2020-01-29Drug Manufacturers
Banco Santander, S.A.SAN.MC2020-01-29Banks—Diversified
Telia Company AB (publ)TELIA.ST2020-01-29Telecom Services
Diageo plcDGE.L2020-01-30Beverages—Wineries & Distilleries
Orsted A/SORSTED.CO2020-01-30Utilities—Renewable
The Unilever GroupULVR.L2020-01-30Household & Personal Products
The Unilever GroupUNA.AS2020-01-30Household & Personal Products
UPM-Kymmene OyjUPM.HE2020-01-30Paper & Paper Products
BBVA, S.A.BBVA.MC2020-01-31Banks—Diversified
Demant A/SDEMANT.CO2020-02-04Medical Instruments & Supplies
Intesa Sanpaolo S.p.A.ISP.MI2020-02-04Banks—Regional
Pandora A/SPNDORA.CO2020-02-04Luxury Goods
ABB LtdABBN.SW2020-02-05Specialty Industrial Machinery
BNP Paribas SABNP.PA2020-02-05Banks—Regional
Danske Bank A/SDANSKE.CO2020-02-05Banks—Regional
VINCI SADG.PA2020-02-05Engineering & Construction
GN Store Nord A/SGN.CO2020-02-05Medical Devices
GlaxoSmithKline plcGSK.L2020-02-05Drug Manufacturers
Siemens AGSIE.DE2020-02-05Specialty Industrial Machinery
SimCorp A/SSIM.CO2020-02-05Software—Application
Vestas Wind Systems A/SVWS.CO2020-02-05Specialty Industrial Machinery
Vodafone Group PlcVOD.L2020-02-05Telecom Services
Enel SpAENEL.MI2020-02-06Utilities—Diversified
Fortum OyjFORTUM.HE2020-02-06Utilities—Renewable
TOTAL S.A.FP.PA2020-02-06Oil & Gas Integrated
Societe Generale SAGLE.PA2020-02-06Banks—Regional
ING Groep N.V.INGA.AS2020-02-06Banks—Diversified
H. Lundbeck A/SLUN.CO2020-02-06Drug Manufacturers
Nokia CorporationNOKIA.HE2020-02-06Communication Equipment
L'Oreal S.A.OR.PA2020-02-06Household & Personal Products
Sampo OyjSAMPO.HE2020-02-06Insurance—Diversified
SanofiSAN.PA2020-02-06Drug Manufacturers
DSV Panalpina A/SDSV.CO2020-02-07Integrated Freight & Logistics
Neste OyjNESTE.HE2020-02-07Oil & Gas Refining & Marketing
Eni S.p.A.ENI.MI2020-02-10Oil & Gas Integrated
L'Air Liquide S.A.AI.PA2020-02-11Chemicals
Amadeus IT Group, S.A.AMS.MC2020-02-11Information Technology Services
Daimler AGDAI.DE2020-02-11Auto Manufacturers
FLSmidth & Co. A/SFLS.CO2020-02-11Specialty Industrial Machinery
Koninklijke Ahold Delhaize N.V.AD.AS2020-02-12Grocery Stores
Swedish Match AB (publ)SWMA.ST2020-02-12Tobacco
Airbus SEAIR.PA2020-02-13Aerospace & Defense
Boliden AB (publ)BOL.ST2020-02-13Other Industrial Metals & Mining
Nestle S.A.NESN.SW2020-02-13Packaged Foods
Orange S.A.ORA.PA2020-02-13Telecom Services
RELX PLCREL.L2020-02-13Publishing
Vivendi SAVIV.PA2020-02-13Broadcasting
Zurich Insurance Group AGZURN.SW2020-02-13Insurance—Diversified
AstraZeneca PLCAZN.L2020-02-14Drug Manufacturers
HSBC Holdings plcHSBA.L2020-02-17Banks—Diversified
Deutsche Telekom AGDTE.DE2020-02-19Telecom Services
Genmab A/SGMAB.CO2020-02-19Biotechnology
AXA SACS.PA2020-02-20Insurance—Diversified
Fresenius SE & Co. KGaAFRE.DE2020-02-20Medical Care Facilities
Schneider Electric S.E.SU.PA2020-02-20Specialty Industrial Machinery
Telefonica, S.A.TEF.MC2020-02-20Telecom Services
Lloyds Banking Group plcLLOY.L2020-02-20Banks—Regional
Allianz SEALV.DE2020-02-21Insurance—Diversified
Jyske Bank A/SJYSK.CO2020-02-25Banks—Regional
Danone S.A.BN.PA2020-02-26Packaged Foods
ENGIE SAENGI.PA2020-02-26Utilities—Diversified
Iberdrola, S.A.IBE.MC2020-02-26Utilities—Diversified
ISS A/SISS.CO2020-02-26Specialty Business Services
Rio Tinto GroupRIO.L2020-02-26Other Industrial Metals & Mining
Anheuser-Busch InBev SA/NVABI.BR2020-02-27Beverages—Brewers
British American Tobacco p.l.c.BATS.L2020-02-27Tobacco
Bayer AGBAYN.DE2020-02-27Drug Manufacturers
Safran SASAF.PA2020-02-27Aerospace & Defense
Saint-Gobain S.A.SGO.PA2020-02-27Building Products & Equipment
BASF SEBAS.DE2020-02-28Chemicals
Munchener Ruckversicherung AGMUV2.DE2020-02-28Insurance—Reinsurance
EssilorLuxottica SAEL.PA2020-03-06Medical Instruments & Supplies
Deutsche Post AGDPW.DE2020-03-10Integrated Freight & Logistics
Royal Unibrew A/SRBREW.CO2020-03-10Beverages—Brewers
adidas AGADS.DE2020-03-11Footwear & Accessories
Prudential plcPRU.L2020-03-11Insurance—Life
Volkswagen AGVOW3.DE2020-03-17Auto Manufacturers
Inditex, S.A.ITX.MC2020-03-18Apparel Retail
E.ON SEEOAN.DE2020-03-25Utilities—Diversified

Chr. Hansen and Novozymes both tumble

The two Danish enzyme manufacturers Chr. Hansen and Novozymes both saw their share price tumble following third quarter earnings. Chr. Hansen released earnings on October 10th and Novozymes released earnings on October 23nd. This followed the October 9th profit warning from Novozymes. Chr. Hansen, which traded and continues to trade at higher multiples, fell from DKK 579.20 to 525.80 (-9.2%) on October 10th, whereas Novozymes didn’t budge. The figures below compare the expansion and contraction of multiples and operating margins of the two companies.

Chr. Hansen is still richly valued and might present itself as a short candidate. AQR Capital Management is one company with a short position in Chr. Hansen. Neither company seems attractively priced at current levels. Both companies suffer in similar segments and both are experiencing declining growth rates.



Chr. Hansen

Chr. Hansen

Media coverage

Oct10 Reuters – Shares in Denmark’s Chr. Hansen slump on lower sales outlook, weak demand

Oct23 JP Finans – Novozymes fastholder forventningerne til året efter nedjustering

Oct23 Børsen – Novozymes i stort kurshop: “Ansættelse af ny topchef er meget meget tæt på”

Oct15 Reuters – Novozymes’ CEO to step down as company looks to rejuvenate sales

Oct10 Bloomberg – `Credibility Problem’ at Novozymes Has CEO Explaining Next Steps


The Pandora turnaround postponed until 2020?

The jewelry company Pandora has issued a press release regarding their quarterly results with the comments below from the new CEO and the CFO.

Alexander Lacik, CEO:

“I’m very excited to join Pandora. We have some very strong fundamentals in terms of a world-class supply chain, a strong product proposition as well as a deep reaching distribution network that gives consumers all around the globe quality access to Pandora. The brand as well as the company has reached a point of maturity and it is not without some serious challenges. The recently announced transformation programme NOW, which I fully support, is a great transition into the future.“

Anders Boyer, CFO:

“Programme NOW is progressing rapidly and is creating a real transformation of our business, culture and organisation. As expected, the first quarter was characterised by continued weak like-for-like further burdened by our deliberate commercial reset. While the first quarter emphasises the need for our planned brand re-launch, it is encouraging to see that our initial commercial pilots and marketing tests to Reignite a Passion for Pandora show good results.”

A transcript of the earnings call is available from Yahoo Finance.

Below are two slides from the earnings call with the highlights of the quarter and two slides with waterfall charts visualising the organic growth and the EBIT margin for the quarter.

Various financial metrics are summarised below. Revenue is shrinking (-6%), gross profit is decreasing (-6%) despite COGS being reduced (-6%) and operating profit is down (-25% excluding restructuring costs) in part due to SG&A being up (+5%); administrative expenses are down (-8%), but sales and distribution is up (+13%). The gross margin is relatively unchanged at 75.9%, but the EBITDA margin is down from 32.6% to 30.7% and the EBIT margin is down from 28.2% to 22.5% (excluding restructuring costs).

ROIC hit another all time low of 47.6%. Because of a switch from the IAS17 to the IFRS16 accounting standard it was further reduced to 35.2%.

Product segments

Revenue from charms was down from DKK2,854m to DKK2,434m (17.3% YoY). Charms will quite possibly make up less than half of the total revenue at the end of 2019. This diversification of product categories is not necessarily a bad thing, as it can be seen as a natural maturation process of the brand and as a reduction of risk.

Geographic segments

China is still growing double digit in terms of store openings (+29%) and revenue (+15%), whereas other mature markets seem to be saturated. The same-store-sales growth is negative (-10%). All of the main markets are experiencing negative like-for-like growth; including China (-4%).

Cost reductions are progressing as expected with DKK100m realised in the quarter. The CFO had the following comment regarding the cost reduction:

As you know, the cost reduction opportunity is quite big. And we target a run rate saving DKK1.2 billion by the end of next year, by the end of 2020. And for ’19 specifically, we expect to realize cost reductions of around DKK600 million. And that comes, as you know, on top of the DKK350 million cost reductions that was announced back in August last year and in connection with the Q2 announcement.

The CFO had the following comment about the restructuring costs, which will include channel buyback

So that’s — we are keeping the DKK1.5 billion — up to DKK1.5 billion in restructuring cost unchanged for that same reason.

Pandora guides with negative growth of -3% to -7% and a lowered EBIT margin of 26% to 28% excluding restructuring costs.

Despite guiding with a lower EBIT margin of 26% to 28% Pandora still has some of the best margins in the jewelry/luxury industry.

An attempt can be made to estimate the 2019 FY earnings. Pandora is guiding with organic growth in the range -7% to -3% and an EBIT margin in the range 26-28%. Below are some more pessimistic expectations regarding earnings and margins prior to restructuring costs based on the lower and higher end of estimates regarding organic growth and cost savings.

By any measure Pandora currently trades at an attractive price; even when factoring in, that net profit could very well be 30% lower in 2019 compared to 2018. Below various multiples such as trailing annual P/E (5.7) are shown.


Pandora 2018Q4

Today Pandora released their annual earnings. The self explanatory figures below summarise the earnings, the margins, the ROIC and the growth for the recent comparable quarters and for the previous TTM periods by product segment and by geographic segment.

Revenue and earnings



By product segment

By geographic segment

Programme NOW

In November Programme NOW was launched to accelerate the strategic transformation of Pandora and drive sustainable growth.

As part of Programme NOW cost reductions of DKK1.2B are planned.

In this context I took notice of the following about “over push” in the press release and the steps taken to remedy it:

“Over push: increased promotional activity has diluted the brand equity and led consumers to wait for the next promotion instead of buying at full price. Additionally, the increase of new product introductions coupled with an immature merchandising process has led to a cluttered assortment presentation in the stores and a further build-up of inventory”

2019 Outlook

Pandora guides with organic growth between 0% and -2% in 2019 excluding their commercial reset as part of Programme NOW.

And they guide with an EBIT margin between 26% and 28% in 2019 excluding restructuring costs.

Pandora expects to return DKK4B to shareholders in 2019. The suggestion is for the dividend per share to be maintained and the repurchase of shares to be cut roughly in half to DKK2.2B. Less money has to be spent on the dividend in 2019, because of the share buyback in 2018.

Press coverage

Here headlines from other news outlets:
Reuters: Jeweler Pandora plans cost cuts, sales seen falling
Bloomberg: Pandora CFO on Guidance, Buyback, CEO Search, Store Closures
Boersen: Pandoras aktie brager op med 15 pct efter regnskab og spareplan


In summary it was anything but an impressive quarter, but it was expected and a data driven diagnosis has been carried out as part of Programme NOW and the multiples are quite low, so that might explain, why Q4 was well received. Pandora was up by more than 10% in early trading hours. Below price-to-operating income time series for publicly listed companies operating in the jewellery industry.


Pandora is one of the largest luxury brands in the world and could overtake Tiffany & Co. in terms of revenue before the end of the next decade.

Pandora has better margins than most other luxury brands.

Pandora is still the most well recognised jewellery brand in the world.

The double digit growth in online sales continue:


Pandora lowers full year guidance

The jewelry maker Pandora, which is still without a CEO, sent out a press release on their Q3 results today. Expected revenue growth for 2018 was revised from 4-7% to 2-4%.

Bloomberg: Pandora Plans `Reset’ in Bid to Shore Up Investor Confidence
Reuters: Charm-bracelet maker Pandora warns again on sales
euronews: Jeweller Pandora cuts 2018 sales outlook, reviews long-term profit target
Financial Times: Pandora cuts growth forecast as profits and sales miss in third quarter
Børsen: Derfor vendte Pandora-aktien rundt fra et to-cifret kurshug til et lille fald

Below are 4 slides from the earnings call and and 1 page from the earnings release summarising the key metrics, financial highlights and revised outlook.

Revenue was down YoY by 3% in local currency and all margins were down as well. Operating cash flow was up due to fluctuations in operating working capital.

The ROIC dropped to an all time low of 51.7%.

Revenue from charms was down YoY along with rings and earrings.

The number of stores was up QoQ and YoY, but the strategy of aggressive store expansion might come to an end in 2019, and the focus will be switched to same store sales growth. The diagnosis is ongoing.

Revenue in China was up and held revenue in APAC up, which would otherwise have been down like EMEA and Americas.

Likewise the EBITDA margin was down in all three regions.

Only three of the seven largest markets experienced positive growth in same store sales.

In summary it was a terrible quarter. Is it all bad then? No, online sales are improving, it is the best recognised jewelry brand in the world, they have a loyal customer base and the global jewelry market will not stop growing. But the days of rapid expansion and reliable double digit growth are probably permanently over.

Pandora remains attractively valued in absolute terms and relative to its peers. Their margins are still impressive in comparison with other manufacturers of luxury goods. And their cash flow still supports a generous buyback programme of DKK4b at somewhat depressed prices. But another negative earnings surprise in Q4 could easily send the share price further tumbling. Poor Q4 results in February and the arrival of a new CEO wanting to throw in the kitchen sink might prove to provide the perfect buying opportunity at further depressed price levels.


How big is the money laundering bank Danske Bank?

The largest financial scandal ever has arrived at the shores of Denmark. It involves money laundering at the Estonian branch of Danske Bank; the largest bank in Denmark. The story was first brought to daylight by Danish newspaper Berlingske in collaboration with journalists from the Russian newspaper Novaya Gazeta in March 2017:
Laundered billions poured through Danish banks

Recently it has received widespread media attention, as the reported numbers have grown to a somewhat astronomical size. Wednesday Danske Bank announced the conclusion of their investigation in a press release. The CEO (Thomas Borgen) also announced he would be stepping down voluntarily. Here a few of the recent articles regarding the case from the WSJ and others:

Sep20 WSJ: Denmark Reopens Investigation into Russia-Linked Money Laundering Case

Sep19 Reuters: Danske Bank CEO quits over $234 billion money laundering scandal

Sep19 Guardian: Danske Bank chief resigns over €200bn money-laundering scandal

Sep19 NYT: Danske Bank Says Billions May Have Been Laundered at Single Branch

Sep19 CNBC: Danske Bank CEO quits in a $234 billion money laundering scandal

Sep14 WSJ: U.S. Probes Danske Bank Over Russian Money Laundering Allegations

The Danish and Estonian Financial Services Authorities released a joint statement in May and the former has commented on the case and commented on the investigation by Danske Bank.

I thought it would be beneficial to myself and others to get a grasp of just how big Danske Bank is, so I created 1) a figure showing the size of Danske Bank compared to other Danish banks in terms of assets, 2) a chart showing the revenue over time of Danish banks, 3) a table showing the size of Danske Bank and other international money center banks relative to GDP and 4) a histogram showing Danske Bank contributing approximately DKK3b of DKK60b in corporate tax revenue in 2016. I think it’s fair to say that the conclusion is that Danske Bank is BIG relative to its peers and the Danish GDP.

Country Name Assets (USDm) Assets / GDP (%)
JPMorgan 2,533,600 13%
Bank of America 2,281,234 12%
Wells Fargo 1,951,757 10%
Citigroup 1,842,465 10%
Danske Bank 559,167 172%
Svenska Handelsbanken 315,505 59%
Skandinaviska Enskilda Banken 291,858 54%
Swedbank 252,296 47%